Carvana Stock Surges on Surprise Profit
Carvana stock is rallying following a strong first-quarter earnings report. Here’s what you need to know.
Carvana (CVNA) stock gapped higher in early trading Thursday after the company reported a surprise profit for its first quarter.
In the three months ended March 31, Carvana’s revenue increased 17% to $3.1 billion while its earnings per share (EPS) improved to 23 cents from a loss of $1.51 in Q1 2023. These results were driven by its retail units sold increasing 15.9% to 91,878 and its gross profit per unit increasing 49.4% to $6,432 from the year-ago period.
"We delivered our best results in company history, validating our long-held belief that Carvana’s online retail model can drive industry-leading profitability while delivering industry-leading customer experiences," Carvana founder and chief executive officer Ernie Garcia said in a statement. "We reached new Q1 milestones for all key profitability metrics while also growing 16% year over year."
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results met or beat analysts’ expectations. According to Yahoo Finance, Wall Street was expecting revenue of $3.1 billion and a per-share loss of 74 cents per share.
For the second quarter, Carvana said it expects to achieve a sequential increase in its year-over-year growth rate in retail units and a sequential increase in its adjusted EBITDA.
"With our strong results in Q1 and outlook for Q2, we expect to comfortably deliver on our outlook of year-over-year growth in retail units sold and Adjusted EBITDA for FY 2024," Carvana said.
"With these strong results, significant fundamental margin opportunities ahead, and a nationwide infrastructure that can support multiples of our current scale, we have never been more confident in our opportunity to become the largest and most profitable automotive retailer and to buy and sell millions of cars," Garcia said.
Is Carvana a buy, sell or hold?
According to S&P Global Market Intelligence, analysts' average target price for the used car retailer's stock is $67.53, representing implied downside of more than 40% to current levels. Additionally, the consensus recommendation is Hold.
However, these estimates may very well change in the days ahead as analysts revise their price targets following the strong first quarter results.
Financial services firm Wedbush provided an update earlier today, maintaining its Neutral (the equivalent of Hold) rating on the stock, while raising its price target from $80 to $120 – right around where the stock trades now.
"While we were positive into the print, and see continued near-term momentum in fundamentals, positive catalysts will be more limited as we move through the year, keeping us Neutral on CVNA," Wedbush said.
Related Content
-
Flashback Finance: The Cost of Retiring the Year You Were BornJust like groceries, gas and home prices, the cost of retiring is subject to inflation. Here is a look at what it cost to retire in the year you were born.
-
How One Hospital Visit Overseas Could Wreck Your FinancesProper planning can give you peace of mind and protection, regardless of what happens on your trips.
-
It's Time to Rethink What 'Aging Well' MeansDon’t fall into the trap of thinking there is a "right way" to age. Here's how to reframe aging in a healthy, achievable way.
-
Your Guide to Financial Stability as a Military Spouse, Courtesy of a Financial PlannerThese practical resources and benefits can help military spouses with managing a budget, tax and retirement planning, as well as supporting their own career
-
3 Steps to Keep Your Digital Data Safe, Courtesy of a Financial PlannerAs data breaches and cyberattacks increase, it's vital to maintain good data hygiene and reduce your personal information footprint. Find out how.
-
Here's Why You Can Afford to Ignore College Sticker PricesCollege tuition fees can seem prohibitive, but don't let advertised prices stop you from applying. Instead, focus on net costs after grants and scholarships.
-
S&P 500 Tops 7,000, Fed Pauses Rate Cuts: Stock Market TodayInvestors, traders and speculators will probably have to wait until after Jerome Powell steps down for the next Fed rate cut.
-
Today's Senior Living Communities Are Not Your Grandma's 'Old Folks' Home': An Expert Guide to Shopping for the Right FitSenior living facilities have improved and are as diverse as the people who inhabit them. Now, they're more than just a place to go — they're a place to grow.
-
3 Common Misconceptions About Working With a Financial PlannerThink financial planners are only for the wealthy and that AI can replace human advice? Nope. Even people with moderate wealth need professional advice.
-
Should You Consider Investing in the Quantum Computing Sector? This Investment Adviser Has Some SuggestionsInvestors interested in quantum computing could consider ETFs focused on cloud services enabling small businesses to use big technology.
-
S&P 500 Hits New High Before Big Tech Earnings, Fed: Stock Market TodayThe tech-heavy Nasdaq also shone in Tuesday's session, while UnitedHealth dragged on the blue-chip Dow Jones Industrial Average.
